Reporting season road map: 19 August 2015
About the author:
- Author name:
- By Tom Sartor
- Job title:
- Senior Analyst
- Date posted:
- 19 August 2015, 10:39 AM
- Sectors Covered:
- Junior (Emerging) Resources, Bulk Materials
Our calls to action based on reporting season results from the week so far:
Happy to buy today
Sydney Airport (SYD) - doing what you expect it to do
The 2015 interim result produced no surprises, with the business model producing 6% EBITDA growth and 9% cashflow growth. Although distribution guidance has been upgraded, we think there is room for a further upgrade. Strong distribution growth and potentially capital management awaits investors in FY16-17.
QBE Insurance Group (QBE) - confirming the turn around
QBE's 1H15 NPAT of US$488m was about 1% ahead of consensus (US$460m), with management delivering a clean result without any negative surprises. With the business now rebased, further cost out to come and the balance sheet strong, management appears to be moving QBE back towards a growth footing. While the tough operating environment still presents a challenge, QBE now looks to have earnings momentum.
Happy to sell today
Monadelphous Group (MND) - still doing it tough
Overall, MND's FY15 result was slightly lower than expected with the higher dividend being the key surprise. Difficult market conditions continue to put pressure on margins despite management’s effort to reduce costs in line with falling revenues. Changes to forecasts see our target price fall to A$7.30 (from A$10.35). Macro headwinds are likely to persist for the foreseeable future.
Widely held stocks
Westpac Banking Corp (WBC) - No capital initiatives announced
The key highlights of WBC's June quarter Capital and Asset Quality update were slightly improved asset quality and no announced capital raising initiatives. We remain of the view that WBC will likely underwrite its DRP over the next two halves to address the increased capital requirements from a lift in mortgage risk weightings. Hold maintained.
Aurizon Holdings Ltd (AZJ) - Dividend payout ratio increased
Cost-outs and a strong performance from Network delivered strong earnings growth in FY15. While the increased dividend payout ratio is appealing, the benign revenue growth outlook requires additional cost-out to achieve margin targets. Our revised target price of $5.41ps reflects new info on the sustainability of GAPE and WIRP revenues, as well as earnings downgrades for the above rail business. Hold recommendation.
More information
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Disclaimer(s): An Analyst or Analysts in the Morgans Research Team may own shares in some or all of these companies.
The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.